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Berkshire Hathaway's Stake Boosts Pool Corp's Investment Appeal

Investors take note: Pool Corp. remains a solid stock to consider. Despite economic fluctuations, earnings are on an upward trajectory, supported by a steady recurring revenue stream and robust cash flow management.

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AI Rating:   7

Pool Corp.'s impressive growth has captured the attention of major investors, including Berkshire Hathaway. The company's business model, which derives 65% of its revenue from supplies and maintenance, contributes to stable cash flow. This consistent revenue stream allows for stock buybacks and dividend payments, bolstering earnings per share (EPS).

The projections for 2025 earnings, estimated at $11.10 to $11.60 per share, represent a recovery from a decline in 2024. Despite challenges due to consumer sentiment and higher interest rates, management's decision to affirm earnings guidance indicates confidence in long-term growth.

Pool Corp.'s focus on maintaining a strong balance sheet has been evidenced by its 14 consecutive years of dividend increases. This approach signals a commitment to shareholder returns while navigating economic uncertainties.

However, the company's significant reliance on the luxury market for new pool installations exposes it to economic fluctuations. Although management has expressed optimism about returning to earnings growth, macroeconomic factors will play a crucial role in consumer spending behavior next season.

Stocks:  NYSE:BRK.B NASDAQ:POOL